Looking at the long term care costs by state can have anyone at wit’s end. The prices of the services are already high at the moment, and yet they seem to continue to increase. While the wealthiest of America can easily cover the costs out of pocket and those on the other end of the spectrum have Medicaid to turn to, the average Americans are left seemingly left to fend for themselves.
As the costs increase to barely reachable heights, more individuals seem to be living longer. This means that there is a higher chance of facing illnesses and health conditions related to age over the years. Without prior planning, older adults run the risk of outliving their retirement savings.
Long term care costs are a big issue not just for the retirees but their families, as well. Currently, 40 million family members are acting as caregivers to their loved ones. And more often than not, the services they provide are unpaid. On top of that, caregiving does not just mean providing physical care. Family caregivers often pay for care services using their own money. In fact, AARP released a study late last year stating that family caregivers spend an average of $6,954 a year on out of pocket costs. This amount is nearly 20% of income.
So what can Americans and their families do to reduce the costs of long term care? Let’s look at three strategies that will help cushion the expenses.
Stop Postponing the Healthy Lifestyle You Know You Need
Not the typical financial tip, is it? However, not many people realize that the way that they treat their bodies now matters immensely, especially in the later years. Despite various programs that aim to encourage individuals to adopt the healthy lifestyle, so many still underestimate the benefits of eating right and exercising regularly.
Moreover, this does not just apply to the people in their 20s and 30s. Active aging can keep health conditions and illnesses at bay. Their bodies are in better shape for fend off illnesses as well as avoid falls, and their minds are able to keep its sharpness. In effect, they may get to postpone or even avoid facing long term care costs simply because they are in good health.
Reduce Long Term Care Costs through Insurance
Long term care costs, as previously mentioned, can easily wipe away anyone’s lifetime savings. This is where long term care insurance comes in.
This type of insurance is specifically designed to address the expenses during long term care. Instead of paying for the services up-front—and there is no telling how much the costs will be when you need them—this insurance product will cover a portion if not all of the expenses. It is important to note that some policies even allow care recipients to provide compensation to their family caregivers. Through the cash benefit that some long term care insurance policies have, care recipients can do whatever they wish to the amount that the policy pays them.
Additionally, long term care insurance can help older adults age in place. As it covers care services in different settings, individuals can opt to receive the care in their own homes just as long as their health permits it. Policies can also provide for home modifications which can help make aging in place safer option.
Research on Long Term Care Tax Deductions
Some medical expenses of older individuals are tax deductible. However, these expenses must fall under the qualified expenses listed by the IRS. These may include preventive care, treatments, vision care, surgeries, dental care, and even insulin.
Bear in mind that these apply to the expenses not covered by an insurance policy. On top of that, services like cosmetic procedures, vitamins, gym memberships, and over-the-counter drugs are not considered tax deductible.
As situations and circumstances are different for everyone, individuals and their families should also take the time to speak with a financial advisor. This way, they get to have a plan that is tailored specifically to their needs and capabilities. People often shy away from this because of the additional costs involved. However, they could potentially save so much more in the end.
Harry Burrow is a financial blogger and former family caregiver. He uses his platform, Life Finance Blog,to shed light on the financial aspect of long term care planning and coverage. These include financial issues, budgeting tips and tricks, money management, savings, and insurance policies. Through his works, Harry aims to help equip Americans in combating the potentially devastating blow that long term care may bring.